Iconoclast @ work

The Connected Company - dealing with Complexity

 The large, vertically integrated, hierarchical organization is one that has persisted throughout the latter half of the twentieth century.  In these organizations, employees generally get paid to do what they are expected to do. They don’t get paid  to innovate or to find new ways of doing things. Where individual idea recognition and information gathering is not valued, top-down corporations give members an incentive to hide information and dissemble in order to keep the bar for performance low. With the decreased importance placed on information flow from a number of diverse sources within the organization, the information brokers closer to the top of the organizational structure become the sole decision makers. (...) 

So why have many traditional business organizations been slow to embrace collaborative decision making instead of relying on command-control systems? Hierarchical systems find their roots in modernist models of creating systems of certainty and security through highly delineated boundaries of function, structure, order and logic. By tightly controlling workers’ duties and influence, leaders emerged as the perceived knowledge holders. Perceived knowledge was the source of actual power. Quite simply, many leaders are reluctant to let go of their monopoly on power and/or mistakenly believe that relinquishing information control will harm the corporation.

 

However, the same social context that created knowledge silos within upper level management is rapidly transforming with advances in technology. Information is more accessible to more people than ever before through the internet and social media. For a leader to believe that he solely has the information and knowledge to act within the best interests of the company is flawed.

Above text was published on the Forbes blog on the same day as The Wall Street Journal Europe published a good article last week on the use of social media by business. Part of the article was based on research that I have been conducting over the past months at Executive Learning Partnership. The main point of the article is that even though businesses are starting to experience benefits from using social media/enterprise2.0 tools and technologies, they have yet to grasp that there are big implications and challenges in terms of "2.0" mindset and working practices that are rippling across the workplace that is often still organized in a "1.0" manner - even though this is a mismatch with today's complex world:

Social media has revolutionized people's private lives, but until now few have truly embraced the benefits it can bring to business. A new poll from Netherlands based consultancy, Executive Learning Partnership, has found that while regular users strongly believe that social media has improved their relationships with customers, far fewer of those polled actually use it for business purposes.

Many organizations feel that they are not yet ready to make this leap. They want to carefully consider the organizational impact as well as the benefits of the technology.

(...)

"The consequence of adopting these tools is that people will start working in new ways," says Berend Jan Hilberts, associate partner at ELP. "Companies need to prepare for that rather than be surprised by it. For one thing, it alters expectations about how companies share information. Some companies guard and cascade information; social media works best when information is shared virally. When the culture doesn't match the tools it can create friction."

There are, of course, some industries and some parts of companies that are not well suited to this way of working. ELP advises companies to take a step-by-step approach to adopting these tools. "As well as the technological challenges, organizations need to address their organizational structure, leadership style and cultural values," says Mr. Hilberts. "There is no point adopting 2.0 technology if your business still has 1.0 working practices."

Three-quarters of respondents claimed that they had encountered some barriers to further adoption but – on the whole – these were not technology related.

Rather, most had said that it was a company's culture, leadership or structure that was holding their organization back from adopting social media in a business context. And thus missing out on the benefits experienced by those who have started to deploy it.

Rien van Lent, the chief executive of ELP, says the biggest challenge most companies face is the deepening complexity of their operating environment. "The homogenous target audiences that companies were dealing with – or thought they were dealing with – have disappeared," he says. "There is far more fragmentation and companies are operating in multi-contextual environments."

Mr. van Lent believes that the old rules of cause and effect within a business arena are breaking down. Companies are finding that they can't manage this with the old tools. Social media provides some new tools and – more importantly – allows a switch in mindset from the old command-and-control hierarchies to one where multiple stakeholders can collaborate, co-create and co-command. The ELP survey found a significant correlation between the use of social media and more collaborative working practices.

Read more 

It sounds so logical: people who like social media are used to sharing, collaborating, trusting, being transparent with information. This must mean that their mindsets, values and behaviors would be skewed towards this type of behavior in the workplace. That is what we hypothesized, and that is what we actually found in our survey. 

We compiled a list of 10 attributes around leadership behaviors and cultural values, and had our respondents indicate whether they liked a "1.0" or more "command-and-control" version of that attribute or the "2.0" or "connect-and-collaborate" version. The attributes were grouped in 5 clusters around:

• information and knowledge management
• communicating
• structure
• culture
• strategizing

We also had them indicate how serious they were into social media (no use, light, medium or heavy user). Then we cross tabulated. And or hypothesis was actually confirmed! For example, on one of the attributes in the Communication cluster: "broadcasting vs. dialogue" (as the most effective way of communicating a message across the organization) of the respondents not using social media at all, 61% showed a preference for the "old-fashioned" broadcast style, whereas heavy users of social media preferred by 78% the dialogue style.

Likewise, in the Information and Knowlegde Management category, on the "undisclosed vs. transparent" attribute we had non-social media users prefer undisclosed by 63%, whereas the heavy users overwhelmingly prefered transparency by a whopping 78%. This number was nicely illustrated in a recent post on the The Economist's Ideas Economy blog by Cristobal Conde and also points to one of the most important benefits: companies get smarter by involving a larger part of their workforce in decision making. 

 

How flattening your company multiplies intelligence

 

There was a time when business leaders were the only ones who had access to all the information, and they alone were expected to make better decisions than the thousands of people who made up their organisation and reported in to them.

 

Now, an important culture shift has taken place as information technology revolutionized the way people communicate, gain knowledge and work. In turn, it’s created a new ‘idea ecosystem’ that has unlocked a massive reserve of human potential and, just as important, growth, for corporations.

 

But what does that all mean?

 

Access to information is significant, but a free flow of information becomes an incredible asset. The organisational hierarchy is flattened, allowing ideas to percolate and people to thrive. A collaborative environment shifts an organization toward meritocracy, as opposed to a command-and-control structure. In essence, it is a multiplier effect for intelligence.

 

Yet creating a collaborative culture is also a challenge that requires the right mindset and tools to flourish. Why should people collaborate? How do leaders establish a collaborative spirit in dispersed, competitive environments? In truth, the how is much simpler: by using tools that enable rapid communication, like email, Yammer, Twitter and other social media platforms that allow people to talk to each other quickly and trade ideas that they can develop into decisions.

via ideas.economist.com

In our ELP survey, we found that resp. 56% and 70% said that  finding the right information or answers resp. easier connecting with relevant colleagues or experts were the main benefits they were experiencing.

 

The point about the organisational hierarchy was also backed-up by our research, even though a little less dramatic than the two attributes above. In the Structure category, on the attribute "hierarchy vs. network", non-social media users preferred network by 65%, but heavy social media users preferred network by an impressive 94%! [BTW: this was higher than we anticipated, and may mean that a whole lot of people feel trapped in the top-down pyramid model that most of them still work in!]

 

We were quite excited to find these correlations confirmed, even though we are not able to confirm the statement that Cristobal Conde makes in his post, the "cause - effect" relationship of simply using more social media to instigate the more "connect-and-collaborate' working styles may not necessarily be true. In theory, it could be the other way around, people with a natural pre-disposition to connecting and collaborating may be more open to social media tools and therefore showing more pronounced adoption of these tools.

 

The key point in all this should not be lost though: companies that want to amplify their 'corporate brain' are smart enough to wire-up and amplify their brain capacity by connecting and empowering more people across their workforce, regardless of their function, department or rank in the corporate hierarchy.

 

And social media tools - corporate wiki's such as Lotus Connections; corporate social networks, such as Jive; microblogging services such as Yammer - are useful accelerators. These companies that are able to mirror the increased connectedness and thus complexity of the world around them in the way they organize themselves internally will be more successful than those that stick to the tried and true "command-and-control" styles and structures. Recent research of the IBM Institute for Business Value ("Capitalizing on Complexity") confirms that companies leapfrogging these old styles and embracing new styles show higher business performance both in short term and long term (caveat: they call it "creative leadership", but it amounts to pretty much the same "connect-and-collaborate" style (and its 10 attributes) that we have researched). At ELP, we call this type of company "The Connected Company".

 

How is your company performing under Complexity? Have you adapted the way you work, lead your people, structure your business, emphasize appropriate values to incorporate "2.0" practices and mindsets, not just the technology? And if you are deploying "2.0" tools and technologies (wiki's, corporate social networks, microblogging) but finding the adoption rate falling behind expectations, have you considered how the "1.0" values, structures and leadership styles might be barriers to successful roll-out? 

 

Would love to hear your perspectives!

 

Connections create more value than Transactions in a Complex World

Image via Wikipedia

I just love conceptual art. Can't help it.

It must be the way my brain is wired, the abstract, spatial perception, holistic, and imaginative attributes of my brain that are relatively overrepresented (and some would argue settle in the right hemiphere of my brain).

So you can imagine how smitten I was when I read a brief article on dutch newssite nu.nl about the artist Caleb Larsen and his work:

A Tool to Deceive and Slaughter

Perpetual online auction, internet connection, custom programming and hardware, acrylic cube.

Combining Robert Morris' Box With the Sound of Its Own Making with Baudrillard's writing on the art auction this sculpture exists in eternal transactional flux. It is a physical sculpture that is perptually attempting to auction itself on eBay.

Every ten minutes the black box pings a server on the internet via the ethernet connection to check if it is for sale on the eBay. If its auction has ended or it has sold, it automatically creates a new auction of itself.

If a person buys it on eBay, the current owner is required to send it to the new owner. The new owner must then plug it into ethernet, and the cycle repeats itself.

This work is discussed in the catalogue for The Value of Nothing, a 2009 exhibition.
Buy or download it.

Follow the current auction here: http://atooltodeceiveandslaughter.com

via www.caleblarsen.com

What Caleb has done wonderfully well (beyond the obvious references to black box trading as a dig at the Wall Street models that got us in the current economic mess), is showing in his artistic way that connections are more important than transactions. Every time the 'sculpture' is sold - a transaction, the result becomes undone by the the piece itself which pings - a connection - the Ebay site and automatically sells itself again, forcing the owner of the piece to establish a connection to plug in the ethernet card. All (previous) owners of the piece are connected through having had the pleasure of a moment in time at which they owned the sculpture, and the sense of loss from the failed transaction. Wow!! How metaphysical is that?

When musing about this great artwork, I remembered the very good post by John Hagel III that I had read earlier today on his excellent HBR blog. It was about the challenge he issued to (certain forms of) open innovation, particularly the ones that were driven by transactions (e.g. InnoCentive). He argues convincingly that connections (he says relationships, but I am taking the liberty here to use the synonym) are more important when confronting the difficult and complex task of innovation. In a previous post, I argued the point that innovation belongs in the complex domain of the cynevin framework. Here is what Hagel writes (bold emphasis by me)

If you look at most of the widely cited examples of successful open innovation, the model in use poses a question to a group of "solvers" who then provide an answer. You might call this the transactional model of open innovation — involving only narrowly defined, short-term transactions. Problem posted, solution offered, payment made, transaction completed, all parties move on.

This approach has two limitations. First, it misses the opportunity to build long-term trust-based relationships among participants. Second, it does not encourage participants to build cumulatively upon the contributions of others.

Why do relationships matter more than mere transactions? Transactions work when explicit knowledge is involved — problems must be precisely framed and solutions must be equally precisely articulated. Of course, this works for a certain class of problems but some of the most challenging problems cannot be precisely framed — that is part of the problem. On the other side, really challenging problems require tapping into the tacit knowledge possessed by more than one individual in order to create new knowledge and generate a workable solution.

Tacit knowledge is the "know-how" that is hard to express or transfer and therefore much more sticky than explicit knowledge. Sharing this kind of knowledge typically requires long-term, trust-based relationships that can support the inevitable fumbling that occurs as we try to express and share tacit knowledge. Effective sharing of tacit knowledge also requires shared practices — the participants need to engage in real work to address challenging performance needs, rather than simply engaging in casual conversations.

We're moving from a world where value is created and captured in transactions to one where value resides in large networks of long-term relationships that provide the rails for much richer "knowledge flows."

via blogs.hbr.org

Hagel uses different words, but essentially he argues that the task of open innovation is so challenging that it can be only solved by placing it in the complex domain and applying the sense-making tecniques that work really well in this domain: leveraging the collective intelligence through conversations amongst agents, from which patterns emerge that can be built on or surpressed. One of the essential characteristics of a complex problem is that cause and effect relations are not present or at least not stable. When playing back the video tape, you would find a different effect from the same cause every time, since the interactions amongst the agenst are in perpetual flux and have large impact on the outcome.

The networks that Hagel favors have a "join up" quality - many agents, no central coordinating mechanism. The transaction model that he rejects have a "join us" character - central coordinating mechanism (the InnoCentive hub), relatively few connections and interactions amongst the agents. See this visualization that I found today on the social media wiki on wikispaces through @venessamiemis:

The transaction model is in essence a model that is borrowed from another domain, the 'simple' domain in cynefin terms, where cause and effect relationships are present and easily perceived. These transactional models work really well for problems with a 'simple' character (e.g. translating an english text in dutch), but applying tools from this domain to the complex domain is a big mistake and will yield sub-optimal outcomes at best. 

Another blogpost I came across today (from Esko Kilpi) argues the point about complex systems and the importance of connections much more eloquently than I just did:

A complex system consists of a large number of agents/nodes behaving according to own principles of local, self-organizing interaction. No one agent, or a group of agents determine how the system as a whole behaves. Self-organization here means the agents interacting locally, following their own principles, rules and intentions, without steering from outside that interaction. All influence takes place in the local interaction. No one agent in the brain or on the Internet, or in an organization, can be in control of the whole system and how it develops, as it develops.  But there is control and there is development, all the time. Both control and development are emergent phenomena of interaction. The interaction itself constrains and enables the people in interaction. People cannot just do whatever they want in a relation. Relations create stability just because relations always constrain. Relations that are based on diversity and difference may enable development without a plan for development.

via eskokilpi.blogging.fi

So here are my questions:

Do you relate to what I write here or are you sold :-)

When do you favor transactions over connections or vice versa

What (online) tools work best to create connections and leverage the collective intelligence to build out and amplify patterns (especially in an open innovation context?)

Related articles by Zemanta

• A Sculpture That Perpetually Sells Itself On eBay (laughingsquid.com)
• The uncollectable artwork (blogs.reuters.com)
• This Disgruntled Artwork Perpetually Sells Itself on EBay [Art] (gizmodo.com)
• Open Innovation's Next Challenge: Itself (blogs.hbr.org)

Understanding the Cynefin framework (and similar thinking) in an Innovation context

At a workshop I facilitated last week - the challenge was helping a team to generate new ideas for innovating their business - I used Dave Snowden's Cynefin framework to great effect. This was a smart crowd, who were willing to go along with our approach on helping them see new directions through a process of emergent discovery - but they wanted to understand why we were following this approach. For the many cerebral folks in this crowd, I explained the Cynefin framework - and they got it! We could have studied 'best practices for establishing an innovation culture', or we could have thoroughly analysed successful innovations of the past for 'good practices' and for discovering cause-effect relationships between new ideas and successful outcomes. But we didn't. And they were ok with it once I explained to them why innovation and 'best practices' or 'analytics' don't go well together, using the Cynefin framework. In short, I argued that innovation - the activity they wanted to engage in - has many characteristics of a complex adaptive system: cause and effect are not linked in a linear way, many agents are interconnected and interacting, etc.

Innovation in this particular client setting (and probably in most cases) takes place for a large part in the 'complex domain' of the Cynefin framework, rather than in the ordered domains the group was more familiar with from their professional training or exposure to big 4 consulting: the  'simple' domain (where best practices might have worked) or the 'complicated' domain (where 'left brain' analysis and experts would have been a good approach). So this time, for the idea generation and elaboration phase, we used a bunch of methods that are really well-suited for the complex domain, and that relied heavily on conversations in smaller sub-groups, creation of many different ideas (or mini-narative fragments), 'right brain' activities such as pattern recognition for clustering the various idea fragments, synthesis, visualization (the wonders a stack of old magazines can do!), and storytelling to bring it all to life. For the workshop, we created a design that featured a mix of Design Thinking concepts (including 'diverging before converging'   from Tim Brown's book Change by Design), a few adapted concepts that were pioneered by Gary Hamel (and the firm he founded: Strategos), including Orthodoxies and Discontinuities (in his classic Competing for the Future) to create stimuli for the idea generation phase and a "Ritual Dissent" exercise out of the Cognitive Edge toolkit to 'pressure test' some of the elaborated ideas in a short time period.

While running the latter simple but effective exercise - they loved it by the way, even those that were being subjected to the critical questions from the other groups - I realized that the exercise emulates on a very small scale what the suggested best way is for surfacing solutions to complex problems: Probing - Sensing - Responding. The idea was quickly probed by the presenter (using a visual 'storyboard'), he/she then sensed the feedback and reaction of the team that listened, and he/she then went back to his/her own team to respond.

The team had great fun while doing this workshop, the outcome of the session had much more depth and variety in terms of the directions they will now start testing and experimenting with (probe-sense-respond on a bigger scale) than earlier, more traditional approaches had yielded.

The interesting thing to me was that I realized how much some of the methods and approaches from Design Thinking, Cynefin/Complexity Theory and the "Hamel/Strategos"-school of strategy actually have in common. One example:

• Design Thinking stresses the importance of prototyping - aimed at making ideas tangible through quick and dirty prototypes in order to learn from it and improve upon it.
• Cynefin advocates 'safe fail probes' as a way of making sense in the complex domain: testing ideas/solution, sensing the impact and responding to this by either amplifying the probe or surpressing it.
• And my friends at Strategos taught me the value of rapid, cost-effective de-risking by doing experiments in an early stage of the process to test critical assumptions or components of the new idea/concept and using the insights to adapt the design.

Sounds very similar, doesn't it? I wonder why - is this just so plain obvious that everyone follows this approach  (but if so, why don't we see more businesses prototyping/probing/experimenting rather than analysing/paralysing new ideas to death?) or is it a case of great minds think alike and is there a confluence of thinking that follows similar principles?

Anyway, in the workshop, the team liked the approach, it was new to them, and they got very intrigued by the Cynefin framework. I shared with them the above visualization of the framework (courtesy of Shawn Callahan of Anecdote, a fellow Cognitive Edge Accredited Practitioner). Shawn Callahan also made this very useful short clip explaining the Cynefin framework.

I think the clip really explains Dave Snowden's thinking on the Cynefin framework well. Hope you will find it useful. And I am eager to learn how you have successfully used or combined concepts, methods or principles from Design Thinking, Complexity Theory/Cynefin and the Hamel/Strategos school to Innovation matters and/or how you interpret the similarities in these approaches?

 

Watch this intersection

Over the next few days, I will start blogging my thoughts on what I see as the emerging space at the intersection of Social Media in a Business Context, Complexity Theory and Right Brain Strategic Thinking.

I have been researching, studying, brainstorming, theorizing and evangelizing on these topics over the past couple of years to various degrees, but until now, never felt the need to share my thoughts other than in small groups or in private conversations. Starting 2010, that has changed! I am now ready to share my thoughts and enter into conversations on a wider basis and extended form. Twitter's 140 characters (see my twitter stream) were a great start, but I have more to say.

Here is what you can expect in this space:

1. Social Media is disrupting what we know about scarcity and abundance. Today, attention is scarce, information is abundant, and ideas spread like wildfire. New game, new rules of interaction!. Not 10 years ago this was unthinkable for business leaders who have learned and are still playing by the old rules. Now they have to adapt and figure out how to find the right balance between the old and new rules in order to survive. A new field has started to emerge that applies the new rules of interaction that are following from the wide adoption of Social Media to a Business Context - Social Business Design. Superhero's I have been inspired by in this field are Clay Shirky, Charles Leadbeater, Seth Godin and of course the authors of the Cluetrain Manifesto.

2. Most leaders were educated and are approaching problems and challenges by seeking answers in the 'ordered' domain. However, most issues today have at least a few elements that are complex. Tackling these complex issues with methods suited for 'ordered' domains is a mistake that can lead to bad outcomes. The Cynefin framework is a tremendous approach that helps leaders understand the difference between chaotic, complex, complicated and simple problems and the respective methods that are well suited (or should be avoided!). My superhero in this field is Dave Snowden of Cognitive Edge, who has cleared the way in this emerging field.

3. Left brain thinking has run its course and outlasted its purpose. The purely rational, logic driven way of reasoning, deductive and linear thinking and number crunching fact-based advice has been successfully applied by strategy advisors and MBA graduates alike over the past decades. We all know where this has gotten us: a financial meltdown, destroyed business models in many an industry (media to name one close to my heart) and an unsustainable way of dealing with our people, our planet and our principles. The next decade will belong to people who bring a different mindset to these problems - the Right Brain Thinkers, who can recognize patterns, foster creativity, make sense and give meaning and create compelling stories. Leading thinkers in this field that I admire are Daniel H. Pink (author of A Whole New Mind) and Tim Brown of IDEO and author of Change By Design.

This is the intersection. This is where I see a need arising for business leaders to find a new way forward:

a)  figuring out how to deal with or leverage Social Media (especially how it is shifting the power balance from company to customers & employees).

b)  starting to realize that many challenges are unordered and complex in nature (rather than ordered) and thus require different approaches than the true and tested expert analysis and advice and best practices that work so well in the ordered domain.

c)  recognizing the different skill sets that Right Brain Thinkers bring to today's problems, recognizing patterns, creating synthesis, the bigger picture and give meaning to it through compelling narratives in stead of breaking down problems into smaller and smaller linear chunks for meaningless analysis and number crunching.

Social Media for Business and Decision Making in Complex Situations both revolve around this: groups of people entering into co-creative, participative conversations. People that are closest to the task at hand, not experts from the outside. People who are not necessarily skilled at this, but with the right help can be guided to new insights and ways forward. Right Brain Thinkers come in handy - they can help recognize the emerging patterns, make sense, create story lines and facilitate the process.

How would you compose groups of complex problem solvers? What social media tools would you leverage to accelerate and empower the process? What skills and traits would you be looking for in a facilitator of this process? What methods would you apply to make sense of challenges in the complex domain? Leave a comment or drop me a note if you want to be part of this conversation.